The Autonomous Region of Bougainville is engaged in a new struggle with the Papua New Guinean Government over the ownership of the island’s controversial Panguna copper mine.

Disputes over the Panguna mine sparked a decade-long armed insurgency that cost an estimated 20,000 lives.

PNG’s Prime Minister wants to give landowners on the island a minority shareholding in Bougainville Copper Limited (BCL), the company which operated the mine.

This would prevent the Bougainville Government from having a controlling share.

Bougainville’s President has responded by threatening to cancel the Australian-listed company’s exploration licence.

BCL holds the only exploration licence over the large copper deposits around the former Panguna mine, and also holds valuable drilling data that any company wanting to mine the area would need.

Bougainville’s President John Momis said that would count for little if the PNG Government refused to hand over a controlling interest in the company.

“The ABG (Autonomous Bougainville Government) will have no option but to cancel Bougainville Copper Limited’s licence, and when that happens, then you’ll have a lose-lose deal,” he said.

The PNG Government has long held 19 per cent of the BCL shares.

Mining giant Rio Tinto had 53 per cent, and recently decided to get rid of its interest.

It gave the Bougainville Government 36 per cent and the PNG Government an extra 17 per cent to give both parties an equal shareholding.

But on August 17, Papua New Guinea’s Prime Minister Peter O’Neill announced the national Government would give the extra 17 per cent to unspecified landowners of the mine area.

“We have given our shares to the landowners,” he said.

“The ABG will keep theirs, we will keep 19 per cent, [and] 17.4 per cent that was gifted to us by Rio Tinto will be now given to the landowners and the people of Bougainville.”

The decision infuriated the Bougainville Government, which has passed its own Mining Act and taken responsibility for the complex negotiations with the various landowner groups and former combatants in the conflict.

Mr Momis said landowner groups were rejecting the Government’s offer of share ownership because it would lead to further disputes.

“We’ve been dealing with them and their representatives unanimously resolved that 17 per cent should go to the ABG,” he said.

‘It’s a political move’: ABG Minister

Part of the peace agreement to end the Bougainville crisis was the promise of a referendum on Bougainville’s independence, which is scheduled for 2019.

But many people in Bougainville think the province would need the revenue from a restarted Panguna mine if it was to secede.

Bougainville’s Mining Minister Robin Wilson said the Prime Minister’s handling of the shares could be designed to weaken the case for independence.

“I think it’s a political move and I’ve been suspecting all along that there is this kind of thinking in the national Government that if Bougainvilleans take over Panguna mine on their own, it will boost their chances of getting independence,” he said.

Bougainville’s threat to cancel BCL’s exploration licence would not just affect its own shareholding and the national Government’s stake; 27 per cent of the shares are owned by smaller investors, and the decision would dramatically affect the value of their holding.

“We’re quite aware of the sensitivities around the shareholding and the directors are continuing to act for the benefit of all the shareholders, including the minority shareholders,” Mark Hitchcock, company secretary of BCL, said.

Mr Hitchcock said the company was talking to both governments and was waiting for more detail about their plans.

“There’s still more to be known about just how that will work,” he said.

“We’re sort of still business as usual and getting the things done that need to be done now, including the transition from the Rio Tinto services agreement, which will make Bougainville Copper a truly independent PNG company.”

There is still a large resource under the ground at Panguna, but the Bougainville Government estimates it will cost about $8 billion to restart the mine and provide the environmental management the site badly needs.

Mr Wilson we are playing right into PNG’s hands. They must be thanking their lucky stars, that the entire ABG strategy for independence is reopening Panguna. Because Panguna will never happen.

What would scare anyone in Waigani hoping to prevent independence, is if the ABG came up with an economic strategy that was not dependent on a highly unstable, turbulent minerals market. But we know there is virtually no chance this will happen. Mining madness will deliver Bougainville onto PNG government plates.